COUNCIL OF Brussels, 5 July 2005 THE EUROPEAN UNION (OR. en) 10205/05 Interinstitutional File: 2005/0057 (CNS) SOC 271 ECOFIN 210 UEM 151 COMPET 135 MI 92 RECH 141 EDUC 102 ENV 296 JEUN 37 OC 436 LEGISLATIVE ACTS AND OTHER INSTRUMENTS Subject: COUNCIL DECISION on Guidelines for the employment policies of the Member States COMMON GUIDELINES Consultation deadline: 11.7.2005 10205/05  KZ/ck DG G II EN COUNCIL DECISION of on Guidelines for the employment policies of the Member States THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty establishing the European Community, and in particular Article 128(2) thereof,   Having regard to the proposal from the Commission,   Having regard to the Opinion of the European Parliament1 ,   Having regard to the Opinion of the European Economic and Social Committee2 ,   Having regard to the Opinion of the Committee of the Regions3 ,   4 Having regard to the Opinion of the Employment Committee, 1 OJ C 2 OJ C 3 OJ C 4 Opinion of 13 May 2005. 10205/05 KZ/ck DG G II EN Whereas: (1) Article 2 of the Treaty on European Union sets the Union the objective inter alia of promoting economic and social progress and a high level of employment. Article 125 of the Treaty establishing the European Community states that Member States and the Community shall work towards developing a coordinated strategy for employment and particularly for promoting a skilled, trained and adaptable workforce and labour markets responsive to economic change. (2) The Lisbon European Council in March 2000 launched a strategy aimed at sustainable economic growth with more and better jobs and greater social cohesion, with long term employment targets, but five years later the objectives of the strategy remain far from being achieved. (3) The presentation of an integrated package of Employment Guidelines and Broad Economic Policy Guidelines contributes to refocusing the Lisbon Strategy on growth and employment. The European Employment Strategy has the leading role in the implementation of the employment objectives of the Lisbon strategy. The strengthening of social cohesion also constitutes a key element for the success of the Lisbon Strategy. Conversely, as set out in the Social Agenda, the success of the European Employment Strategy will contribute to the achievement of greater social cohesion. 10205/05  KZ/ck DG G II EN (4) In line with the conclusions of the Spring European Council of 22 and 23 March 2005, the Union must mobilise all appropriate national and Community resources – including the cohesion policy – in the Lisbon Strategy's three dimensions (economic, social and environmental) so as better to tap into their synergies in a general context of sustainable development. (5) The objectives of full employment, job quality, labour productivity and social cohesion must be reflected in clear priorities: to attract and retain more people in employment, increase labour supply and modernise social protection systems; to improve adaptability of workers and enterprises; and to increase investment in human capital through better education and skills. (6) The Employment Guidelines should be fully reviewed only every three years, while in the intermediate years until 2008 their updating should remain strictly limited. (7) The Employment Committee and the Social Protection Committee have formulated a joint opinion on the Integrated Guidelines for Growth and Jobs (2005-2008). (8) The Council recommendation of 14 October 2004 on the implementation of Member States' employment policies1 remains valid as background reference, HAS ADOPTED THIS DECISION: OJ L 326, 19.10.2004, p. 47. 10205/05  KZ/ck DG G II EN Article 1  The guidelines for Member States' employment policies as set out in the Annex are hereby adopted.   Article 2 The guidelines shall be taken into account in the employment policies of the Member States, which shall be reported upon in the national reform programmes. Article 3 This decision is addressed to the Member States. Done at Brussels, For the Council The President 10205/05 KZ/ck DG G II EN ANNEX The Employment Guidelines (2005-2008) (Integrated Guidelines Nos 17-24) • Guideline No.17: Implement employment policies aiming at achieving full employment, improving quality and productivity at work, and strengthening social and territorial cohesion • Guideline No.18: Promote a lifecycle approach to work • Guideline No.19: Ensure inclusive labour markets, enhance work attractiveness, and make work pay for job-seekers, including disadvantaged people, and the inactive • Guideline No.20: Improve matching of labour market needs • Guideline No.21: Promote flexibility combined with employment security and reduce labour market segmentation, having due regard to the role of the social partners • Guideline No.22: Ensure employment-friendly labour cost developments and wage-setting mechanisms • Guideline No.23: Expand and improve investment in human capital • Guideline No.24: Adapt education and training systems in response to new competence requirements 10205/05  KZ/ck ANNEX DG G II EN Guidelines for the employment policies of the Member States Member States, in cooperation with the social partners, shall conduct their policies with a view to implementing the objectives and priorities for action specified below. Reflecting the Lisbon strategy, the Member States' policies shall foster in a balanced manner: • Full employment: Achieving full employment, and reducing unemployment and inactivity, by increasing the demand for and supply of labour, is vital to sustain economic growth and reinforce social cohesion. • Improving quality and productivity at work: Efforts to raise employment rates go hand in hand with improving the attractiveness of jobs, quality at work and labour productivity growth, and reducing the share of working poor. Synergies between quality at work, productivity and employment should be fully exploited. • Strengthening social and territorial cohesion: Determined action is needed to strengthen social inclusion, prevent exclusion from the labour market and support integration in employment of people at a disadvantage, and to reduce regional disparities in terms of employment, unemployment and labour productivity, especially in regions lagging behind. Equal opportunities and combating discrimination are essential for progress. Gender mainstreaming and the promotion of gender equality should be ensured in all action taken. As part of a new intergenerational approach, particular attention should be paid to the situation of young people, implementing the European Youth Pact, and to promoting access to employment throughout working life. Particular attention must also be paid to significantly reducing employment gaps for people at a disadvantage, including disabled people, as well as between third-country nationals and EU citizens, in line with any national targets. 10205/05  KZ/ck ANNEX DG G II EN In taking action, Member States should ensure good governance of employment policies. They should establish a broad partnership for change by involving parliamentary bodies and stakeholders, including those at regional and local levels. European and national social partners should play a central role. A number of targets and benchmarks which have been set at EU level in the framework of the European Employment Strategy in the context of the 2003 guidelines are included at the end of this Annex and should continue to be followed up with indicators and scoreboards. Member States are also encouraged to define their own commitments and targets, for which they should take these into account, as well as the 2004 recommendations agreed at EU level. Good governance also requires greater efficiency in the allocation of administrative and financial resources. In agreement with the Commission, Member States should target the resources of the Structural Funds, in particular the European Social Fund, on the implementation of the European Employment Strategy and report on the action taken. Particular attention should be paid to strengthening institutional and administrative capacity in the Member States. GuidelineNo.17:Implement employmentpolicies aiming at achievingfull employment, improving quality and productivity at work, and strengtheningsocial and territorial cohesion. Policies should contribute to achieving an average employment rate for theEuropean Union (EU) of 70% overall, of at least 60% for women and of50% for olderworkers (55 to 64)by 2010, and to reduce unemploymentand inactivity. Member States should consider setting nationalemployment rate targets. 10205/05 KZ/ck ANNEX DG G II EN In addressing these objectives, action should concentrate on the following priorities: • Attract and retain more people in employment, increase labour supply and modernise social protection systems; • Improve adaptability of workers and enterprises; • Increase investment in human capital through better education and skills. ATTRACT AND RETAIN MORE PEOPLE IN EMPLOYMENT, INCREASE LABOUR SUPPLY AND MODERNISE SOCIAL PROTECTION SYSTEMS Raising employment levels is the most effective means of generating economic growth and promoting socially inclusive economies whilst ensuring a safety net for those unable to work. Promoting an increased labour supply in all groups, a new lifecycle approach to work and modernising social protection systems to ensure their adequacy, financial sustainability and responsiveness to changing needs in society are all the more necessary because of the expected decline in the working-age population. Special attention should be paid to tackling the persistent employment gaps between women and men, and the low employment rates of older workers and young people, as part of new intergenerational approach. Action is also required to tackle youth unemployment which is on average double the overall unemployment rate. The right conditions must be put in place to facilitate progress in employment, whether it is first time entry, a move back to employment after a break or the wish to prolong working lives. The quality of jobs, including pay and benefits, working conditions, employment security, access to lifelong learning and career prospects, is crucial, as are support and incentives stemming from social protection systems. 10205/05  KZ/ck ANNEX DG G II EN GuidelineNo.18:Promote a lifecycle approach to workthrough: –a renewed endeavour to build employmentpathwaysforyoungpeople and reduceyouth unemployment, ascalled for in the European Youth Pact; –resolute action to increase femaleparticipation and reducegendergaps in employment, unemployment and pay; –better reconciliation of work and private life and theprovision of accessible and affordable childcarefacilities and care for other dependants; –support for activeageing, including appropriate working conditions, improved (occupational) health status and adequate incentives to work and discouragement of earlyretirement; –modern socialprotection systems, includingpensions and healthcare, ensuring their socialadequacy, financial sustainabilityand responsiveness to changing needs, so as to supportparticipation and betterretention in employment and longer working lives. See also integrated guideline "To safeguard economic and fiscal sustainability as abasis forincreased employment"(No.2). 10205/05 KZ/ck ANNEX DG G II EN Facilitating access to employment for job seekers, preventing unemployment and ensuring that those who become unemployed remain closely attached to the labour market and increase their employability are essential to increase participation and combat social exclusion. This requires breaking down barriers to the labour market by assisting with effective job searching, facilitating access to training and other active labour market measures and ensuring that work pays, as well as removing unemployment, poverty and inactivity traps. Special attention should be paid to promoting the inclusion of disadvantaged people, including low-skilled workers, in the labour market, including through the expansion of social services and the social economy, as well as the development of new sources of jobs in response to collective needs. Combating discrimination, promoting access to employment for disabled people and integrating immigrants and minorities are particularly essential. GuidelineNo.19:Ensure inclusive labourmarkets, enhance work attractiveness, and makework payforjob-seekers, including disadvantaged people,and the inactivethrough: –active and preventive labour market measures including early identification of needs, jobsearch assistance, guidance and trainingaspart ofpersonalised action plans, provision ofnecessary social servicesto support the inclusion of those furthest away from the labourmarket and contribute to the eradication ofpoverty; –continual review of the incentives and disincentives resultingfrom the tax and benefitsystems, including the managementand conditionality ofbenefits and a significantreduction of high marginal effective tax rates, notably for those with low incomes, whilstensuringadequate levelsof socialprotection; –development of new sources ofjobs in services for individuals and businesses, notablyatlocal level. 10205/05 KZ/ck ANNEX DG G II EN GuidelineNo.20:Improve matching of labourmarket needsthrough: –the modernisation and strengthening of labour market institutions, notably employmentservices, also with a view to ensuringgreater transparency of employment and trainingopportunities at national and European level; –removing obstacles to mobility for workers across Europe within the framework of theTreaties; –better anticipation of skill needs, labour market shortages and bottlenecks; –appropriate management of economic migration. IMPROVE ADAPTABILITY OF WORKERS AND ENTERPRISES Europe needs to improve its capacity to anticipate, trigger and absorb economic and social change. This requires employment-friendly labour costs, modern forms of work organisation and well-functioning labour markets allowing more flexibility combined with employment security to meet the needs of companies and workers. This should also contribute to preventing the emergence of segmented labour markets and reducing undeclared work. In today's increasingly global economy with market opening and the continual introduction of new technologies, both enterprises and workers are confronted with the need, and indeed the opportunity, to adapt. While this process of structural changes is overall beneficial to growth and employment, it also brings about transformations which are disruptive to some workers and enterprises. Enterprises must become more flexible to respond to sudden changes in demand for their goods and services, adapt to new technologies and be in a position to innovate constantly in order to remain competitive. They must also respond to the increasing demand for job quality which is related to workers' personal preferences and family changes, and they will have to cope with an ageing workforce and fewer young recruits. For workers, working life is becoming more complex as working patterns become more diverse and irregular and an increasing number of transitions need to be managed successfully throughout the lifecycle. With rapidly changing economies and attendant restructuring, they must cope with new ways of working, including enhanced exploitation of Information and Communication Technologies (ICT) and changes in their working status, and be prepared for lifelong learning. Geographical mobility is also needed to access job opportunities more widely and in the EU at large. 10205/05 KZ/ck ANNEX DG G II EN GuidelineNo.21:Promoteflexibility combined with employmentsecurityand reduce labourmarketsegmentation, having due regard to the role of thesocialpartners,through: –the adaptation of employment legislation, reviewing where necessary the differentcontractualand workingtime arrangements; –addressing the issue of undeclared work; –better anticipation and positive management of change, including economic restructuring, notably changes linked to trade opening, so as to minimise their social costs and facilitateadaptation; –thepromotion and dissemination of innovative and adaptable forms of work organisation, with a view to improving quality and productivityat work, including health and safety; –support for transitions in occupational status, including training, self-employment, business creation and geographic mobility. See also integrated guideline "To promotegreatercoherencebetween macroeconomic, structuraland employmentpolicies" (No.5). 10205/05 KZ/ck ANNEX DG G II EN To maximise job creation, preserve competitiveness and contribute to the general economic framework, overall wage developments should be in line with productivity growth over the economic cycle and should reflect the labour market situation. Efforts to reduce non-wage labour costs and to review the tax wedge may also be needed to facilitate job creation, especially for low-wage employment. GuidelineNo.22:Ensureemployment-friendlylabourcostdevelopmentsand wage-settingmechanismsby: –encouraging socialpartners within their own areas of responsibility to set the rightframework forwagebargaining in order to reflectproductivity and labourmarketchallenges atall relevantlevels and to avoid genderpaygaps; –reviewing the impact on employment of non-wage labour costs and whereappropriateadjust their structure and level, especially to reduce the taxburden on the low-paid. See also integrated guideline "To ensure that wage developments contribute to macroeconomicstabilityand growth" (No.4). 10205/05 KZ/ck ANNEX DG G II EN INCREASE INVESTMENT IN HUMAN CAPITAL THROUGH BETTER EDUCATION AND SKILLS Europe needs to invest more in human capital. Too many people fail to enter or to remain in the labour market because of a lack of skills, or due to skills mismatches. To enhance access to employment for all ages, raise productivity levels and quality at work, the EU needs higher and more effective investment in human capital and lifelong learning for the benefit of individuals, enterprises, the economy and society. Knowledge-based and service-based economies require different skills from traditional industries; skills which also constantly need updating in the face of technological change and innovation. Workers, if they are to remain and progress in work, need to accumulate and renew skills regularly. The productivity of enterprises is dependent on building and maintaining a workforce that can adapt to change. Governments need to ensure that educational attainment levels are improved and that young people are equipped with the necessary key competences, in line with the European Youth Pact. All stakeholders should be mobilised to develop and foster a true culture of lifelong learning from the earliest age. To achieve a substantial increase in public and private investment in human resources per capita and guarantee the quality and efficiency of these investments, it is important to ensure fair and transparent sharing of costs and responsibilities between all actors. Member States should make better use of the Structural Funds and the European Investment Bank for investment in education and training. To achieve these aims, Member States commit themselves to establishing comprehensive lifelong learning strategies by 2006 and implementing the Education and Training 2010 Work Programme. 10205/05 KZ/ck ANNEX DG G II EN GuidelineNo.23:Expand and improve investment inhuman capitalthrough: –inclusive education and trainingpoliciesand action to facilitate significantlyaccess to initial vocational, secondary and higher education, including apprenticeships and entrepreneurship training; –significantly reducing the number of early school leavers; –efficient lifelong learning strategies open to all in schools, businesses, public authoritiesand households according to European agreements, including appropriate incentives and cost-sharing mechanisms, with a view to enhancingparticipation in continuous and workplace training throughout the life-cycle, especially for the low-skilled and olderworkers. See also integrated guideline "To increaseand improve investment in R&D, in particularbyprivatebusiness"(No.7). Setting ambitious objectives and increasing the level of investment by all actors is not enough. To ensure that supply meets demand in practice, lifelong learning systems must be affordable, accessible and responsive to changing needs. Adaptation and capacity-building of education and training systems is necessary to improve their labour market relevance, their responsiveness to the needs of the knowledge-based economy and society and their efficiency. ICT can be used to improve access to learning and better tailor it to the needs of employers and employees. Greater 10205/05 KZ/ck ANNEX DG G II EN mobility for both work and learning purposes is also needed to access job opportunities more widely in the EU at large. The remaining obstacles to mobility within the European labour market should be lifted, in particular those relating to the recognition and transparency of qualifications and competences. It will be important to make use of the agreed European instruments and references to support reforms of national education and training systems, as is laid down in the Education and Training 2010 Work Programme. GuidelineNo.24:Adapt education and trainingsystems in response to new competencerequirementsby: –raisingand ensuring theattractiveness, opennessand quality standards ofeducation and training, broadening the supply ofeducation and training opportunities and ensuringflexible learningpathways and enlargingpossibilities for mobility for students and trainees; –easingand diversifyingaccess for all to education and trainingand to knowledgebymeans of working time organisation, family support services, vocationalguidance and, ifappropriate, new forms of cost sharing; –responding to new occupational needs, keycompetences and future skill requirementsbyimproving the definition and transparency of qualifications, their effectiverecognition and the validation of non-formal and informal learning. 10205/05 KZ/ck ANNEX DG G II EN Targets and benchmarks set in the framework of the European Employment Strategy The following targets and benchmarks were agreed in the context of the European Employment Strategy in 2003: – that every unemployed person is offered a new start before reaching 6 months of unemployment in the case of young people and 12 months in the case of adults in the form of training, retraining, work practice, a job or other employability measure, combined where appropriate with on-going job search assistance; – that 25% of long-term unemployment should participate by 2010 in an active measure in the form of training, retraining, work practice, or other employability measure, with the aim of achieving the average of the three most advanced Member States; – that jobseekers throughout the EU are able to consult all job vacancies advertised through Member States' employment services; – an increase by five years, at EU level, of the effective average exit age from the labour market by 2010 (compared to 59,9 in 2001) ; – the provision of childcare by 2010 to at least 90 % of children between 3 years old and the mandatory school age and at least 33 % of children under 3 years of age; – an EU average rate of no more than 10% early school leavers; – at least 85% of 22-year olds in the EU should have completed upper secondary education by 2010; – that the EU average level of participation in lifelong learning should be at least 12,5% of the adult working-age population (25 to 64 age group) . 10205/05  KZ/ck ANNEX DG G II EN